|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S.B. 763
|
|
|
|
|
|
VETOES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) (I) IN A REPURCHASE TRANSACTION, THE INSURER SHALL
RECEIVE AS ACCEPTABLE COLLATERAL TRANSFERRED SECURITIES HAVING A
MARKET VALUE AT LEAST EQUAL TO 102% OF THE PURCHASE PRICE PAID BY THE
INSURER FOR THE SECURITIES.
(II) IF AT ANY TIME THE MARKET VALUE OF THE ACCEPTABLE
COLLATERAL IS LESS THAN 100% OF THE PURCHASE PRICE PAID BY THE INSURER,
THE BUSINESS ENTITY COUNTERPARTY SHALL BE OBLIGATED TO PROVIDE
ADDITIONAL ACCEPTABLE COLLATERAL, THE MARKET VALUE OF WHICH, TOGETHER
WITH THE MARKET VALUE OF ALL ACCEPTABLE COLLATERAL THEN HELD IN
CONNECTION WITH THE TRANSACTION, AT LEAST EQUALS 102% OF THE PURCHASE
PRICE.
(III) SECURITIES ACQUIRED BY AN INSURER IN A REPURCHASE
TRANSACTION MAY NOT BE SOLD IN A REVERSE REPURCHASE TRANSACTION,
LOANED IN A SECURITIES LENDING TRANSACTION, OR OTHERWISE PLEDGED.
(O) (1) THE RESERVE INVESTMENTS OF A LIFE INSURER MAY INCLUDE
DERIVATIVE TRANSACTIONS UNDER THIS SUBSECTION, WHETHER ENTERED INTO
DIRECTLY OR INDIRECTLY THROUGH AN INVESTMENT SUBSIDIARY, UNDER THE
CONDITIONS OF PARAGRAPHS (2) THROUGH (7) OF THIS SUBSECTION.
(2) (I) AN INSURER MAY USE DERIVATIVE INSTRUMENTS UNDER THIS
SUBSECTION TO ENGAGE IN HEDGING TRANSACTIONS AND INCOME GENERATION
TRANSACTIONS.
(II) AN INSURER SHALL BE ABLE TO DEMONSTRATE TO THE
COMMISSIONER THE INTENDED HEDGING CHARACTERISTICS AND THE ONGOING
EFFECTIVENESS OF THE DERIVATIVE TRANSACTION OR COMBINATION OF THE
TRANSACTIONS THROUGH CASH FLOW TESTING OR OTHER APPROPRIATE ANALYSES.
(III) THE COMMISSIONER MAY ADOPT REASONABLE REGULATIONS
FOR INVESTMENTS AND TRANSACTIONS UNDER THIS SUBSECTION, INCLUDING
REGULATIONS TO IMPOSE FINANCIAL SOLVENCY STANDARDS, VALUATION
STANDARDS, AND REPORTING REQUIREMENTS.
(II) PRIOR TO ENTERING INTO ANY DERIVATIVE TRANSACTION.
THE BOARD OF DIRECTORS OF THE INSURER SHALL APPROVE A DERIVATIVE USE
PLAN THAT:
1. DESCRIBES INVESTMENT OBJECTIVES AND RISK
CONSTRAINTS, SUCH AS COUNTERPARTY EXPOSURE AMOUNTS;
2. DEFINES PERMISSIBLE TRANSACTIONS IDENTIFYING THE
RISKS TO BE HEDGED AND THE ASSETS OR LIABILITIES BEING REPLICATED: AND
3. REQUIRES COMPLIANCE WITH INTERNAL CONTROL
PROCEDURES THAT DEMONSTRATE THE INTENDED HEDGING CHARACTERISTICS
AND THE ONGOING EFFECTIVENESS OF THE DERIVATIVE TRANSACTION OR
COMBINATION OF THE TRANSACTIONS THROUGH CASH FLOW TESTING OR OTHER
APPROPRIATE ANALYSES.
|
|
|
|
|
|
|
|
|
|
- 4140 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
 |
